IMPACT OF CAPS, CUTS AND COUNCIL TAX ON BENEFIT INCOMES

3 December 2012

IMPACT OF CAPS, CUTS AND COUNCIL TAX ON BENEFIT INCOMES

The following letter is being sent to all Peers and MPs this morning 3rd December 2012. The impact of the caps and cuts is causing havoc in the lives of our poorest fellow citizens now and and will be even more deeply punitive after the new imposition of 20% of the council tax on benefit incomes by many councils and and the overall benefit caps of £500 a week for families and £350 for single adults from April 2013. Haringey Council has undertaken an analysis I have quoted in the letter to MPs and Peers. The impact on benefit incomes in Haringey will be repeated throughout England and Wales.

I suggest we do all we can to persuade out local MPs and Councils to campaign to stop the government implementing the overall benefit cap in April 2013; it is not enough but it is a start at reversing the trend of worsening poverty in the UK.

With good wishes,

Paul

To all Peers and MPs.

Crime and Courts Bill report stage House of Lords Tuesday 4th December,and the cumulative impact of caps, cuts and council tax.

Please ask the government not to implement the £500 overall benefit cap in April 2013 because of the havoc if will cause in the lives of many thousands of your poorest fellow citizens and their families. Baroness Meacher will move an amendment calling for the regulation of Bailiffs and Bailiff companies on Tuesday the 4th December at the report stage of the Crime and Courts Bill. It is a new clause after Clause 21. Bailiffs services are likely to be employed against an increasing incidence of unpayable council tax by councils from April 2013.

During her speech she will draw Peers’ attention to the cumulative impact on the incomes of UK’s poorest citizens of the Local Government Finance Act 2012, allowing local councils to tax the benefits delivered by the DWP from April 2013, the Welfare Reform Act 2012 introducing an overall benefit cap of £500 in 2013 and the October 2010 amendments to the Local Housing Allowance regulations introducing the housing benefit caps.

She will use a few examples from the analysis of the cumulative impact on 13,891 households produced by Haringey Council, who are proposing to tax central government benefits with 18% of the council tax from April 2013; the council has omitted the impact of the bedroom tax and failed to mention the reduction in the value of benefits as a result of moving the annual uprating from RPI to CPI from April 2011.

Haringey’s analysis shows that the government has created an earthquake below the incomes and lives of the UK’s poorest citizens which will inevitably be followed by a Tsunami of debt, misery and hunger. In many cases the cumulative impact will wipe out, or very substantially reduce, the incomes needed for food, fuel, clothes and transport and create destitution.

HARINGEY’S ANALYSIS

A maximum cumulative impact of £313.12 pence a week will wipe out the £258.83 a week benefit needed for food, fuel, clothes, transport and other necessities by 9 unemployed couples with two children as a result of the overall benefit cap, the housing benefit cap and Haringey’s proposed council tax. The average for the 9 couples is £108.46.

Maximum Impacts. £pw

Council Tax 6.29

LHA cap 110.00

OBC £500 cap 196.83

Cumulative impact 313.12

Average cumulative impacts £108.46 a week for the 9 households in Haringey

Unemployment benefits needed for necessities.

£pw

Couple 111.45

Family Premium 17.40

Dependent child 64.99

Dependent child 64.99

Total 258.83

Whether the cumulative impact is at the maximum of £313.12 a week or the average of £108.46 a week it will have to come out of the benefits of £258.83 a week; 9 such families in Haringey will fall into unmanageable debt and will have to move. Some will be long term unemployed others recently unemployed due to the recession.

The levels of Universal Credit from April 2013 will be broadly similar to the current levels uprated by the CPI. That has provided a lower uprating than the RPI since 2011 while the prices of food and fuel escalate.

There are 4 working families with four children who will have to find and average of £112.23 or a maximum of £256.69 out of their income after housing benefit and council tax benefit have been paid. The council does not tell us what that is, out of an average total of income from all sources including benefits of £699.74.

There are 49 unemployed couples with two children who will have to find an average £72.40 a week or a maximum of £255.24 out the benefits of £258.83, as a result of the cumulative impact. They will also have to move.

The plight of single adults aged 25-60 is no less serious.

73 unemployed single adults will have to find an average £41.43 a week, or a maximum of £158.01 a week out of a IS/JSA/ESA of £71 a week as a result of the cumulative impact; they will also have to move.

The Joseph Rowntree minimum income standard for a single adult covering food, fuel, clothes and transport is £91 a week – so the 6837 unemployed single adult who will not find it easy to pay £3.18 a week council tax from April 2013.

Where will so many people move to when there is a desperate shortage of affordable housing nationwide. Those are the figures for only one Borough.

Council tax arrears are inevitable and, for many, it will not be possible to pay them off. The councils then apply for a liability order costing up to £120; if the bailiffs are involved by the councils then defaulters will charge £75 for what will be called compliance, adding £230 if they make a visit and £110 more for seizing goods, on top of the arrears.

This is an impending disaster for the communities in Tottenham and a potential tragedy for the households themselves; it will be repeated in many Boroughs throughout England and Wales.

The link to the complete Haringey analysis is http://www.minutes.haringey.gov.uk/mgConvert2PDF.aspx?ID=26910 (see Appendix C) It should be noted that Haringey uses the incomes before housing costs have been deducted in every case. This is misleading. It is the incomes after housing and council tax have been deducted which have to pay the short fall rent and council tax created by the caps and cuts.